Leeds property Debate: Housing chief’s challenge to builders

In the first of three special features on housing in Leeds, Neil Hudson talks exclusively to city housing boss Coun Peter Gruen, who says we’re on the brink of a building boom

Councillor Peter Gruen, the man in charge of Leeds City Council’s housing policy, says the city is on the brink of a housing boom with plans to create up to 5,000 new homes in east Leeds.

He says the ambitious scheme, known as the East Leeds Extension (ELE), could light the touchpaper for similar schemes across the city, delivering around 70,000 homes by 2028.

However, there’s a ‘but’. And it’s a big one. Coun Gruen says developers aren’t building fast enough, that they are clinging to outdated profit model.

The plans, which for the most part, have already been given town hall approval, would create at least 5,000 homes between the York Road and Wetherby Road in places like Barwick, Seacroft and Scholes. It would be a mix of houses, shops, doctors’ surgeries and schools.

While other schemes may be taking place across the city, all eyes are on the East Leeds Extension. If it works, Leeds will have taken a step toward alleviating its housing woes and cutting the estimated 27,000 people on the housing waiting list.

Coun Gruen said: “Not enough of the extant planning permissions are being implemented. The pace of building is slow, although the demand is there. We are told the economy is picking up and yet volume house builders insist they will only build about 30-35 units per site.

“When we challenge them and say why don’t you build more quickly - their response is we will only build what we can sell at the price we want to sell. That’s the issue now. It’s not that they couldn’t build more, they could but they want to make the maximum profit.

“I think their financial model is broken - it has a built in 20 per cent profit [margin]. You ask any business in this city if they are making a 20 per cent and you will get a fairly dusty answer. If people knew homes were not being built at a pace and were being deliberately held back I think they would be unhappy.”

In the year to December 2013, Persimmon Homes, one of the major national companies involved in the East Leeds Extension increased total revenues by 33 per cent to £1.2bn compared to £0.9bn in 2013.

Other housebuilders Coun Gruen refers to include Bellway and Miller Homes. Bellway is on track to make £233m in pre-tax profits, while Edinburgh-based Miller Homes made pre-tax profits of £10.4m. All house builders agree the housing market has come back to life. Order books are strong, with Bellway revealing it expects to build houses worth £670m.

But far from wanting to antagonise housebuilders, Coun Gruen says he is keen to get them on board.

The plans, many of them on green field sites, were granted town hall approval in 2011 after the council lost 11 consecutive planning appeals (at a cost of around £1m). The ELE spans some 560 acres, 157 of which would be allocated to business use and would create an additional 5,000-7,000 homes.

“There are 70,000 home planned by 2028 - about 4,000 homes per year. We think that’s do-able and in a way that adds to the consternation I feel, because actually they have a willing partner in the council. We are not saying go away, don’t build any houses. We’re saying come in, talk to us, join us… as long as they are willing to invest in communities. We don’t want them to cut and run and put up cheap, low qual housing which we won’t tolerate.”

In the next few weeks, the Government is expected to rubber stamp a new ‘core strategy’ for Leeds - a blueprint setting out how the city will expand in the next decade.

In addition, so-called 106 Agreements, which force housebuilders to create various infrastructure projects as part of new developments (things like changes to the road layout and childrens’ play areas) are set to be replaced with the Community Infrastructure Levy, which will require developers to pay money directly to the council, who will have to report it is spent.

“The Community Infrastructure Levy is not a silver bullet, it won’t provide all the money we need but it will provide some.

“If I take for example, the East Leeds Extension - north east Leeds where developers want to initially build 2,000 but potentially up to 5,000 new homes, we’re talking about the East Leeds Orbital Route (ELOR), a £100m dual carriageway which will also act as a relief road to the existing ring road. That’s a necessary prerequisite before you start building 5,000 houses. We need somewhere for the traffic to go.

“Now we understand the problems developers have and that they have to make a profit and we understand about cashflow problems and so on, so we will say to them there are a number of infrastructure issues and we will agree with you the phases over the timeline of the development.

“If you are putting roads and schools and other amenities in early, perhaps the affordable homes will come later.”

The ELOR has been talked about for the last 20 or 30 years and would be an extension to the existing outer ring road, skirting Red Hall around the east side of Leeds connecting to Thorpe Park and the motorway.

“It all hinges on there being proper infrastructure in place. The planning application we have got is between Wetherby Road and the ring road. Several developers are involved. What we are not going to say is each of you can build a part of the ELOR.

“We could be delivering up to 5,000 houses in this area. That would make a fantastic difference to people but none of it will happen unless we get infrastructure.

“They put a planning application in to build 2,000 houses and then they tell us they are going to build at the pace of 70 a year - well, that’s going to take 25 years to build 2,000 houses.

“The simple point I am making is would you want to live in a community where there’s going to be a 20 year building site? The answer is no.”

He adds: “Le Tour gave us some amazing aerial pictures of Yorkshire. We marvelled at its beauty and we want to protect that. Planning will be a major battleground in the coming election because we want to protect communities from avaricious volume house builders who will build anywhere they can. That is not our vision. Our vision is to build sequentially, using brownfield land.

“In my ward, we have accepted we will build on the old Barnbow site. But we want the infrastructure first - the Manston Lane Link. If you build that, go ahead and you can build on Barnbow. They have got permission to do phase 1 (150 houses) and they now want to continue building (1,000 new homes) and we are saying stop, you need to provide the roads. Turn the first spade on site and show us the colour of your money and we’ll believe you. They have attended public meetings and promised people they will build it.

“We are on the threshold of massive opportunity. With the ELOR, we are losing some land which was protected in the past but has already been put forward for development.

“The city is going to expand eastwards. We are all grown up, we all want the same thing, we can make it happen, we do not want to fall out - the private sector have competing interests with different landowners and different banks and time scales. If we can find a way through, it would be a tick in everybody’s box.”

East Leeds Orbital will change city forever

The East Leeds Orbital Route (ELOR) will be an extension to the outer ring road - it will loop round and cut through farmland.

Even though the £100m scheme isn’t due to begin until 2016, Coun Gruen says he is keen to get commitment from builders now. The situation is complex, because the scheme will require the partnership of numerous developers.

The East Leeds Extension itself is comprised of 37 individual parcels of land across 26 different ownerships. The ELOR will link up with another road, The Manston Lane Link, joining ongoing housing schemes on the old Barnbow site, where Bellway Homes have developed 121 houses. Ben Bailey Homes are also bringing forward 138 houses on the former Optate site - potential for 879 homes taken together.

Last week, the Government pledged £5.1m to help with preparations for the ELOR.